Why do I need holiday home insurance?

Why do I need holiday home insurance?

Many people in Australia see owning a second property as offering a lifestyle change; a private getaway of sorts they can use as a holiday home. If you’re the proud owner of a holiday home, you have the perfect escape from the stress of daily life. 

However, just like your regular home, you must get holiday home insurance for this property, so you have peace of mind whether or not you're occupying it. Whether you’re keeping the property for your own use or renting it out, getting holiday home insurance is simple once you know which policy you need to get.

If you plan on retaining your holiday home for yourself, a home and contents insurance policy should take care of your needs. All you need to do is let your insurance provider know if the place will remain unoccupied for more than 60 days, else your policy could get cancelled.

If you plan to rent out your holiday home for 90 days or more, you'll need to opt for landlord insurance. For short stays, like Airbnb, you should consider a holiday let insurer.

If you plan on using the holiday home as your own place

If you have a holiday home that you keep for vacations and weekend getaways, you will want to ensure it's well taken care of, both during your stay and when you're not around. For that, you'll need to get yourself home insurance.

However, there’s one big difference between insuring your home and a holiday house. When you don’t stay in a property and don’t visit it for a long time, most insurers consider it to be unoccupied. In this scenario, the insurer might either make you pay an additional excess (if you are making a claim) or cancel your policy. 

A house is generally considered to be unoccupied if it lies vacant for 60 days, but each insurer can have different guidelines for this, so it’s important that you check this point while finalising your holiday home insurance. In most cases, the insurer could be persuaded to extend this date if you need to.

What are the benefits of home insurance cover while on vacation?

With holiday home insurance in place, you have peace of mind for when you are at your vacation home or away from it. 

With the home insurance policy, you're financially covered for:

  • Fire damage
  • Storm and rainwater damage
  • Escape of liquid (e.g. a burst pipe, especially in your absence)
  • Impact at home (e.g. a tree falls on your property)
  • Breakage of glass and other fixtures
  • Malicious damage, vandalism
  • Theft (or attempted theft)
  • Furniture, furnishings and kitchenware
  • Computers and electrical appliances
  • Clothing
  • Other valuables including jewellery, sunglasses and cameras
  • Blinds, curtains, fitted carpets and rugs
  • Lightning
  • Earthquake or tsunami

What's not included in the holiday home insurance?

Along with knowing what you’re covered for, it’s also important to know what's not included in the home insurance for your holiday home, such as:

  • Renting out your holiday home, for which you need landlord insurance
  • Allowing your home to fall into disarray with overgrown grass, broken mailbox, etc.
  • Any modifications or renovations you make to the home that change the structure
  • Not keeping on top of repairs and maintenance

Are you looking to rent out your holiday home?

If you plan to rent out your holiday home and are looking to insure it, you have two options:

  • Landlord insurance: For if you want to rent out your holiday home for 90 days or more at a time
  • Holiday let insurance: For short stays, like Airbnb or Stayz.

What can you expect when you opt for holiday home insurance under these policies?

Getting landlord or short term holiday insurance is like getting an extension for your standard home and contents cover. With this, you’re covered against:

  • Deliberate and accidental damage caused by tenants and their guests
  • Theft by tenants and their guests
  • Loss of rental income in case a tenant defaults on payment
  • Loss of rental income if your property is uninhabitable after damage
  • Loss of rental income if an unavoidable incident prevents the tenant from paying
  • Changing keys and locks if a tenant doesn't return your keys
  • Legal costs of taking action against tenants
  • Legal liability if guests get hurt, slip, die or hold you legally liable for their injury, death or damage
  • Damage to property contents provided for guest use

Since short term holiday lets like Airbnb are relatively new, not many insurance providers offer short-term rental insurance. Terri Scheer and ShareCover are two insurance providers that can provide you the cover that you are looking for.

What's not included in these insurance policies?

There are a few exclusions with landlord or Airbnb insurance cover:

  • Water damage caused by creating an opening made to renovate or extend the property
  • Poor housekeeping habits of your tenants
  • Standard wear and tear, rust or mould
  • Damage because of insects or vermin
  • Repairs made by the tenant that you permitted
  • Under landlord insurance you won't be covered for Airbnb or Stayz
  • You won’t get cover if you are only renting out a room while living at the property

You can compare various home insurance choices before selecting an option that works for you.

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Learn more about home insurance

Do I need home insurance for a home loan?

While home insurance isn’t necessarily a requirement for a home purchase per se, it’s likely that if you’re purchasing a home with the help of a home loan, you’ll need to take out home insurance on the property. Home insurance can be one of the factors required in the pre-settlement documentation for a home purchase, and you may be advised by either the bank or a broker (or both) ahead of settlement.  

Is my home insurance covered for weather damage?

It is important to understand what is covered and what isn't covered in your home insurance policy before purchasing it. One crucial point to consider at the time of evaluating home insurance policies is whether it includes home insurance weather damage cover, and what it actually means if it does.

Typically, the protection afforded by home insurance actually depends on how the home was damaged or affected by conditions. The whole idea behind home insurance is to protect you from loss or damage against an unexpected, sudden event, like a fire or storm. If your home was in the way of a storm and your roof was damaged, which also caused internal water destruction, you may be covered for the damage to the roof and the property. The same holds true for walls or a fence that got damaged in a storm or flood.

However, you may not be covered if the damage occurred because your property was not well maintained and your home suffered a leak. A poorly maintained fence is less likely to be covered by home insurance.

Does home insurance cover tenant damage?

If you have a property that you rent out to tenants, you may ask, does home insurance cover tenant damage? Generally, as a landlord, you’ll require a different type of insurance policy than a regular home and contents insurance that offers coverage for the unique situations faced by landlords.

Landlord insurance

As a landlord, you must insure against additional risks to protect your investment. A landlord home and contents insurance policy covers loss due to natural disasters, storm, and fire. Generally, it also covers fixtures like stovetops, light fittings, window coverings, carpets, and ovens.

Additionally, you may protect yourself against any loss arising due to damage to your property caused by your tenants or their guests. Some landlord insurance policies may also protect you against financial loss due to unpaid rent.

Does homeowners insurance cover tenant damage? In most cases, regular homeowners’ insurance policy will not cover such damage. It’s always best to refer to the product disclosure statement (PDS) to clearly understand what is included and excluded from your home insurance policy.

What is home insurance?

For homeowners, home insurance can provide some financial protection to your property when things don’t go as planned. If you have home insurance and your property is damaged (or even the permanent fixtures inside), you could make a claim to your insurer to cover the costs of getting it fixed, replaced or rebuilt.

The idea behind property insurance is that you pay insurance providers to take on the risk of loss or damage to your property that you would otherwise be carrying. 

Can you transfer home insurance?

When you sell your home, you cannot transfer the home insurance policy to the new owner. The buyers need to purchase a new home insurance policy where the insurer will calculate the premium based on several factors.

The risk of any damage to the home is transferred to the new owners when you sell the property. You can speak to an experienced conveyancer or solicitor to find out more about when the risk gets passed to the buyers in your state or territory.

If you move to a new home

Can you transfer home insurance to a new property if you move to a new home?

Some insurers may allow you to transfer your policy to a new property as long as you meet certain conditions. These include informing the insurance company as soon as you enter into a contract to buy the new home. You may need to pay an additional premium when transferring your existing home insurance policy to the new property.

Do I need legal cover on home insurance?

Besides protecting your home and your possessions from damage and theft, many home insurance policies also cover unfortunate accidents that sometimes result in legal action. This is called home insurance legal cover.

What does it cover?

This type of insurance cover protects you and your family members from liability if someone gets injured on your property. You can also get coverage for scenarios such as you or a family member accidentally injuring someone else outside your home or accidentally damaging someone else’s property. 

Typical liability claims include slips and falls in your home and the ensuing medical expenses, or falling trees or branches that cause  damage to your neighbour’s home or parked car.

Dog bites are another claim often covered. If your dog bites someone and you’re found liable, you’ll be covered for the vet and medical bills. Similarly, if your dog damages someone else’s property, home insurance legal cover will often take care of your liability.

Every member of your family is usually automatically included in home insurance legal cover provided they live with you.

What does home insurance cover?

What home insurance specifically covers and the extent of the coverage depends on the insurance provider and the individual policy. However, home insurance typically covers the property and other permanent structures found on or in the property, such as fences, in-ground swimming pools, garages, and dishwashers, to name a few.

There are usually two types of homeowner's insurance you can choose from, with "total replacement cover" or "sum-insured cover". 

If you’re not sure which option to take, it may be worthwhile to speak to a professional valuer to understand how much it might cost to rebuild your home and replace what's inside.

Is hail damage covered by home insurance?

If storms are among the incidents covered by your home insurance policy, hail damage protection is more than likely assured. While all policies differ based on your needs and what a home insurance provider will offer, some things are close to a certainty. 

Extreme weather events tend to be unpredictable in their severity, but dangerous all the same. You'll never be able to fully prepare for any damage caused, be it lightning, strong winds, rain leading to flooding, or hailstorms, but home insurance can at least provide you with a way to deal with life's unpredictable nature. 

If your home suffers from hail damage, you can file a claim with your insurer. In the event that this happens, remember to take pictures of any hail damage as an insurance adjuster will need to evaluate the impact on your home. Any additional wind damage to your roof will also need to be documented similarly.

You may want to check if your home insurance also covers hail damage to the cars parked on your property, and then file the claim for the total damage caused by the hailstorm. Once your claim is approved, your insurer should offer you either a cash settlement or refer you to a network vendor for the necessary repairs.

Does home insurance cover accidental damage?

Home insurance offers cover for any damage to your house and most policies cover the main building, garage, permanent attachments, and other external buildings that can be locked. 

Every insurance policy lists the defined events that will be covered, such as fires, floods, lightning strikes, theft, or falling trees. A few may also offer the option of accidental damage home insurance cover for other possible mishaps and unintentional damage around the home, such as when the dog knocks over the TV, or when red wine is spilled on the carpet.

The home insurance accidental damage cover is available only for the address provided at the time of buying the policy. 

What is a home insurance premium?

Your home insurance premium is what you pay your insurance provider for covering your home under their home insurance policy. It is calculated based on the type of coverage you choose for your home as well as any additional coverage you buy for either your possessions or specific incidents. Your premium can either be paid annually or in smaller instalments. 

Your home insurance policy may cover the total replacement cost, which is the actual expense of rebuilding your home from scratch. Alternatively, it can cover an insured sum, which is a predetermined estimate of what it might cost to rebuild your home. You’re more likely to pay a higher premium for total replacement cover than for insured sum coverage.

Apart from selecting your coverage, you’ll have to figure out your excess, which is the amount you pay out of your own pocket for each insurance claim. If you are okay with paying a higher excess, your insurance premium may be lower. Conversely, if you choose a lower excess, you may pay a higher premium. 

Your insurance premium can also be higher if you live in an area prone to incidents like floods, bushfires, or theft, as insurers are more likely to receive a higher number of claims in such neighbourhoods. 

If you also want to buy insurance for your belongings, a combined home and contents insurance policy may have a lower premium than paying premiums on separate policies for your home and your belongings. 

Are bikes covered under home insurance?

Ordinarily, home insurance only covers damage to your house, which can include additional buildings such as garages, sheds, and fences, as well as permanent fixtures. 

However, to protect the items located in your home or in any of these other buildings, you will likely need to purchase home and contents insurance. Even so, your bike would only be covered if it does not require separate vehicle registration, as is the case for bicycles and 50cc minibikes, but not motorcycles, and only when located on your property, parked or otherwise. 

Depending on the cost of your bicycle or minibike, you can have it listed in your home and contents insurance as a high-value item. You'll want to check your insurer’s Product Disclosure Statement (PDS) to know the normal coverage limit for a bike included as part of your home and contents insurance, as well as the incidents which are covered. 

Insuring your bicycle can be distinct to insuring any personal effects on your bike at the time, or even using the bike when you're out and about. If you want to cover those, such as something in a basket or a camera equipped to the bicycle, or the bike itself as you travel, you will likely need to purchase additional personal effects insurance. You can also read about any additional coverage available under the personal effects policy, though for full coverage, an ideal option will likely be a separate bike insurance policy.

How to file a Youi home insurance claim

Dealing with a disaster is never a pleasant experience, but it can be worse if your home is extensively damaged. At some point, you’ll have to estimate the damage to your home and file the necessary insurance claim. 

If you’ve bought a Youi home insurance policy, you can contact them regarding an insurance claim either by calling 13 9684 or through the Youi website. If you don’t remember your policy number, you can identify yourself and provide your address when speaking to a Youi member to grant yourself access to your policy details, handy if you’ve had to leave home in a rush and may not have had the time to collect any of your belongings, let alone insurance policy documents. 

You may not need to fill out any claim forms right away, but you’ll need to describe the incident and the damage caused to your home. Once you’ve contacted Youi, an inspector will visit your home and verify the damage before your claim is accepted and processed. Insurers usually expect you to contact them at your earliest possible convenience after a damaging incident, or within 30 days at the latest, as is the case with Youi

Type of home insurance do I need?

There are two types of house insurance policies, namely total replacement cover and sum insured cover. The former covers the total cost of rebuilding the house to the same standard before it was damaged. The latter home insurance type covers the cost of damages up to a predetermined limit, which is called the sum insured.

Different types of homeowners’ insurance may offer extra cover at an additional premium, including accidental damage, fire insurance, storm insurance, flood insurance, motor burnout insurance, home and contents insurance, and contents insurance. These extras are not classified as homeowners’ insurance types; include one or more based on your situation. 

Does home insurance cover tree root damage?

While trees can add much beauty to your property, they can be an indirect cause of damage to your home. For instance, a storm could knock branches off trees on to your roof or windows. A really strong storm may even cause the tree to topple entirely. 

Home insurance may not directly cover tree damage to your house. However, the policy will likely cover the incident, such as a storm, which resulted in branches or uprooted trees falling on your home. You can check your home insurance policy’s coverage for various incidents by reading the insurer’s Product Disclosure Statement (PDS).

You should remember that trees can require regular maintenance, just like the plumbing in our homes. Insurers may check whether the tree, its roots or its branches were rotting due to a lack of care, in which case the damage caused by the tree falling on your home may not be considered accidental damage. Again, if a branch falls on your house while you’re trimming it, you may not be able to claim compensation from your insurer for the damage. If any trees are growing too close to the walls of your home, consider checking that none of the branches or roots is causing any stress to your home, which can result in structural damage.